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US oil spending could hit $165B on global conflicts, report says
Fuel Fix ^ | June 19, 2014 | Collin Eaton

Posted on 06/20/2014 5:06:03 AM PDT by thackney

Oil and gas producers could boost their annual spending to $165 billion in the United States as conflicts in Iraq and elsewhere send crude prices higher, according to a report released by Barclays on Wednesday.

Exploration and production spending, the lifeblood of the oil field service industry, which employs thousands in Houston, is expected to jump 9.6 percent over last year, according to the London bank.

North American operators are putting more muscle behind oil production, and already have made slight adjustments to their outlook for this year’s oil prices, their benchmark for spending budgets.

But at $91 a barrel, their estimates still trail this year’s average U.S. benchmark crude prices by about $10 a barrel. West Texas Intermediate crude was $106.43 a barrel Thursday. It had risen past $100 a barrel in May.

“Given the conservative commodity price assumptions currently driving spending, we think North American E&Ps could be in position to outspend their budgets by the end of the year,” Barclays analysts wrote in the report of exploration and production companies.

Forty-two percent of U.S. exploration and production companies told Barclays they would increase their capital spending budgets if West Texas Intermediate crude prices kept hovering around $100 a barrel.

None of the companies Barclays surveyed said they would drop spending at current prices, “which we think provides strong evidence that actual E&P spend will outpace current expectations.”

A big part of the increased growth: West Texas. Oil companies have boosted the number of rigs in the Permian Basin this year, driving the nation’s rig count to the highest level in two years, before multiwell-pad drilling spread throughout the rig market and allowed operators to cut back on rigs and drill more wells.

The U.S. rig count climbed above 2,000 in mid-April, up from about 1,750 at the beginning of last year, Barclays reported, citing RigData and its own research.

In the Permian, the rig count currently stands 33 percent above its level at the same time last year as operators deploy more horizontal units equipped to tackle shale basins.

“Recent activity gains in the Permian have been massive,” but the play is “still in the early stages” of increased growth, as oil producers keep pursuing attractive returns “tied to the new horizontal wells coming online throughout the basin.”

Across the globe, Barclays predicts oil companies will spend $712 billion this year, a slight dip from its previous estimate.

TOPICS: Business/Economy; News/Current Events
KEYWORDS: energy; oil
links to other related articles at the source
1 posted on 06/20/2014 5:06:03 AM PDT by thackney
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To: thackney

The MSM prepping us and putting us on notice that we will soon be paying $5 plus a gallon...don’t you hate the Obama administration more and more every day?

2 posted on 06/20/2014 5:51:06 AM PDT by jsanders2001
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